Checking accounts are a banking tool that helps you manage your finances. There are different types of checking accounts to meet various needs. However, all these accounts operate in a similar method. The best free checking accounts are those without a minimum balance or maintenance fee. These depend on the bank.
But before choosing the bank, you will have to weigh the advantages and disadvantages of checking accounts. Here is a quick look at these to help you choose.
Advantages of Checking Accounts
There are several advantages of checking accounts. They include:
- Interest on Balance
Interest may not be a given in every checking account. Some require that you have a minimum amount present to access the interest. The interest rate may not be much, but it is better than nothing.
- Low Maintenance Costs
These bank accounts may or may not have a maintenance cost. If there is a maintenance cost, it is usually low. If you do not incur an overdraft, you are safe. It may also not cost you anything to access your money from an ATM. Other banks will cover any ATM fees that occur.
- No Need to Carry Cash
Debit cards are traceable. So if someone steals your debit card, you can block it. However, cash is untraceable. You can get another debit card and continue with your daily transactions.
- Keep a Record of Your Spending
These accounts help you keep a record of your spending. It makes it easy to come up with a personal budget and stick to it. You can easily manage your spending.
Disadvantages of Checking Accounts
Read the fine print when opening a checking account. Otherwise, you will miss the disadvantages of these accounts. To help you along, here are a few.
- Organizations Can Track Your Spending Habits
Tracking your spending can be a disadvantage. Checking accounts create transactions that organizations can store and refer to in the future. Although they keep them with your permission, your spending habits can generate targeted advertising.
It may cause you to spend more money than your budget. So be careful which transactions you use your debit card. Sometimes, you can pay with cash.
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- Not Every Account Is Free
Sometimes, there are costs when you are setting up your account. These costs may apply if you do not maintain your minimum balance. Sometimes, you may be careful and ensure you always keep the minimum balance. However, there may be other charges like new checks that may revert to your account.
- Financial Institutions Can Block Your Access
If a financial institution suspects that spending may not be yours, they can block the account. If it happens on a Friday, you will probably get access to your account on Monday. That may leave you without money to operate over the weekend.
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Conclusion
Checking accounts are advantageous. At the same time, you need to be careful. They are not for everyone. Evaluate all the key points and the terms and conditions of the bank before starting your checking account.
Sources:
https://www.investopedia.com/ask/answers/040715/what-are-pros-and-cons-online-checking-accounts.asp
https://www.forbes.com/advisor/banking/checking-vs-savings-accounts/